Request for Line of Credit

John Bittner

Guillermo Carrasquillo

George Eichleay

Nate Johnson

Danny Kim

Joonsoo Kim

Chris Thompson

Drew Wyatt

CEE 244A

November 19, 2001

Our Goal

MK Overview: What We DoTransportation Industry

Rail, subway, and locomotiveTransportation Infrastructure

Bridges, roadways, and tunnelsEnvironmental

Cleanups and remediation

MK Overview: What We Do Industrial Process

Construction, operations, and maintenancePower Industry

Mining, nuclear, and hydroelectric

MK: An Overview 20% of revenue in

international markets in Canada, Brazil, Argentina, Hong Kong, etc.

Management Strategy

Management StrategyDecentralization of corporate structure

Increases individual unit efficiency Makes units more responsive to customer

needs Links responsibility with authority In case of MK Gold, made independent

company through public stock offering Increases flexibility of each unit

MK: Strong Financial Growth Revenues increasing

+20% compared to 1989

Strong quality backlog $4.2 billion

Diversification Government = Stability + Worldwide

Growth BOOT

Secure long-term source of revenue

Future Needs for Financing Morrison-Knudsen Financial Needs

Short-term finance to meet our needs for working capital

Bank negotiations to get $150 million revolving credit on March 31, 1994

Putting additional finance to use Increase in Accounts Receivable and Inventory

levels, and decrease in Customer Advances, particularly in the Rail System segment.

Financial PositionMK 1992 MK 1993 Atkinson 1993 Fluor 1993

Liquidity Ratios Current Assets

Current Liabilities

Quick Assets

Current Liabilities

Ave. Accounts Receivable * 365

Revenue

Profitability Ratios Income before G&A

Revenue

Net Income

Revenue

Net Income

Ave. Owner's Equity

Leverage Rat i os Total Liabilities

Owner's Equity

Long-Term Liabilities

Owner's Equity

Total Liabilities

Total Assets

Long-Term Liabilities

Total Assets0.21= 0.10 0.10 0.09

Long-Term Debt to Equity

Debt to Assets

Long-Term Debt to Assets

=

0.23 0.53

= = 0.66 0.66 0.57 0.60

= = 0.31 0.30

= = 1.93 1.99 1.40 1.48Debt to Equity

1.31% 0.27% 2.12%

Return on Equity = = unknown 9.14% 1.25% 17.33%

Return on Sales = = -0.31%

26.22 52.11 16.39

Gross Margin = = 2.25% 2.81% 8.45% 3.09%

Ave. Collection Period = = unknown

1.15 1.69 1.41

Quick Ratio = = 0.56 0.47 0.71 0.76

Current Ratio = = 1.12

Financial Position

-250000

-200000

-150000

-100000

-50000

0

50000

100000

150000

200000

Major Cash Activities '91-93

Operations

Investing

Finance

Losses: Each Year Different 1991 - (Investments) Losses on Investments and Loans to affilitates

Corrective Action – Improved investment portfolio, reduced loans to affiliates

1992 – (Financing) Repayment of Long Term Debt Corrective Action – Done: reduced debt, better debt to equity ratios, and

interest coverage capabilities 1993 – (Operations) Increasing Inventory (Rail) and Collections

(Accounts Receivable and Advances) Corrective Action – Sell receivables to banks; stabilize rail operations to

produce larger operational income

Financial Position

Receivables/Inventory vs. Cash from Operations

-100000

-50000

0

50000

100000

150000

200000

1991 1992 1993

Receivables andInventory

Cash from Ops

Advances

Financial PositionOverall Cash Available

-250000

-200000

-150000

-100000

-50000

0

50000

100000

150000

200000

1991 1992 1993

Year

Do

lla

rs (

00

0s

)

Operations

Investing

Finance

Available

Corporate OutlookTransportation Manufacturing

20 year franchise to operate/maintain commuter rail line in Buenos Aires

Transportation Infrastructure $1.2 billion contract for Hong Kong Airport

Environmental $100 million wastewater project in Egypt

Corporate Outlook Industrial Process

Contract with Pepsi-Cola for bottling plants across U.S.

Power Acquired MIBRAG, the largest coal mining

operation in East Germany

Consultant Recommendation

I know all they want is

stock tips“Morrison-Knudsen is highly viable and I strongly recommend providing the financing which they have requested.”

He wants another Coke, I

just know it